Abbott cuts 1,900 jobs, mostly from Lake County
Abbott Laboratories said Wednesday it would eliminate 1,900 employees — including about 1,000 in Lake County — to keep profits up, indicating that one of the pharmaceutical industry's few success stories of recent years is not immune to cost pressures squeezing the sector.
The maker of drugs and devices said the terminations involve U.S. marketing and manufacturing positions in and around its headquarters in Libertyville Township. The cuts, which represent about 2 percent of the company's work force, are expected to save Abbott $300 million in coming years.
Abbott blamed the cuts on new fees and pricing pressures associated with the health reform law and a “challenging regulatory environment” at the Food and Drug Administration, which approves new drugs.
“Of those 1,000, they are primarily manufacturing and the majority of those positions will be impacted over the next few years, not today,” said Abbott spokeswoman Melissa Brotz. “The majority of the remainder of positions are throughout the United States. Those are primarily commercial positions in the U.S. pharmaceutical business and will be impacted now.”
Brotz said Abbott will provide severance and outplacement services to affected workers and will offer them “priority consideration” for open positions.
Abbott has steadily increased its revenue year after year, even as most of its pharmaceutical peers have watched sales fall as patents on blockbuster drugs expire. And while the company's multibillion dollar, anti-inflammatory drug Humira continued to deliver in the latest quarter, Abbott has stumbled in efforts to develop new therapies.
Last week the company halted research on a next-generation psoriasis drug after the FDA indicated additional clinical trials would be needed to win approval.
The company also has wrestled with high-profile safety problems in the past year. It pulled its diet drug Meridia from the market in October because of heart risks, only one month after it recalled millions of containers of its best-selling Similac baby formula because of possible contamination from insect parts.
Despite these and other challenges, the company continued to deliver double-digit earnings and profit growth in the fourth quarter, meeting Wall Street's expectations.
Looking ahead to 2011, the company predicted earnings growth between 9 and 11 percent, just below analyst expectations.
Eighth District U.S. Rep. Joe Walsh, a Republican, characterized Abbott's layoffs as “a product of the regulatory burden they have to live under” and said he intends to visit Abbott next week to “get an inside blow-by-blow of the situation.”
&bul;Daily Herald staff Anna Marie Kukec and Kerry Lester contributed to this report.